Sources: Corbett May Privatize Pennsylvania Lottery; Discussions Could Begin As Early As Next Week.

The Corbett administration has begun telling senior lawmakers it is examining the possibility of privatizing the Pennsylvania Lottery, people with knowledge of the matter said Friday.

The Republican is telling caucus leaders of the House and Senate this week that it will seek a “request for qualifications” for the lottery — basically testing the waters on the issue — the sources said. The lottery employs 233 people, most of whom are unionized.

The administration could meet with key committee chiefs as soon as Monday, said three of the sources, who requested anonymity because they had agreed not to speak publicly about the matter.

It was not clear how much of the agency’s operations the administration is looking to privatize nor how much it would be legally authorized to spin off. Two sources said the meeting is being billed as a discussion of the agency.

An administration spokesman did not return a call for comment Friday.

Last September, Corbett created a panel to examine whether “any functions now performed by state government might be better and more cost-effectively performed by the private sector.”

The lottery has been the subject of discussions in those meetings, and the panel has looked at models in other states. Illinois, for instance, has turned management of its lottery over to a private firm. But the state retains ownership of the agency, said Matthew Brouillette, president of the Commonwealth Foundation, who sits on the Pennsylvania panel.

The administration could face federal hurdles if it tries to spin off the lottery, two sources said.

Money raised by the Pennsylvania Lottery is targeted at senior citizens. The agency funds such widely used programs as the Property Tax Rent/Rebate program, which gives eligible homeowners a rebate of as much as $650 on their local property taxes.

The agency also helps pay for the state’s popular Pharmaceutical Assistance Contract for the Elderly and PACE Plus, which allow participants to take advantage of benefits offered through PACE and the Medicare Part D drug benefit.

The agency had receipts of $1.62 billion in fiscal 2011-2012, according to the administration’s budget proposal. It ended that year with a balance of $113 million.